Get SECURITY DEPOSIT DISPOSITION REPORT 2020-2024

A security deposit is intended as a measure of security for the recipient, and can also be used to pay for damages or lost property. Security deposits serve as an intangible measure of security, or as a means of tangible security in the event of damages or lost property.

It follows the accounting principle; the deposit is a current liability that is debited and sales revenue credited. A customer deposit could also be the amount of money deposited in a bank. Since there are no cash earnings, the money is debit to the bank and credit to the customer's deposit account.

Because the security deposit is not considered rental income it does not appear on the income statement or net cash flow reports. Instead, the deposit is shown on the rental property balance sheet in the security deposit category.

Returning a refundable security deposit that you previously received from a tenant is not an expense. You refund money paid as a security deposit at the end of the lease provided that the terms of the lease are met.

If your security deposit should be included in taxable income, then you can record the receipt of a security deposit as Rental Income with a note in the description. However, if the security deposit is refundable to the tenant, then you should create a separate Other Current Liability account to track the deposits.

Since the security deposit is refundable (and the tenant intends to comply with the specified conditions) the tenant that paid the security deposit will report the amount as an asset.

The damage deposit is intended to pay the cost of damages, cleaning, excessive wear and tear, and unreturned keys once the lease agreement has ended and/or for any unpaid charges or attorney fees suffered by the Landlord by reason of Tenant's default of this lease agreement.

Because the security deposit is not considered rental income it does not appear on the income statement or net cash flow reports. Instead, the deposit is shown on the rental property balance sheet in the security deposit category.

Total Deposit Liabilities refer to the total amount of deposits held by financial institutions (from depositors). It is the sum of savings deposit, demand deposit, time certificates of deposit, long-term negotiable certificates of deposit, and negotiable order of withdrawal (NOW) accounts.